Germany Needs To Follow The Example Of Its Footballers

Philipp_Lahm_lifts_the_2014_FIFA_World_Cup

By John Richardson

WHAT a fantastic World Cup and Germany were deserved winners. Their flair, dedication, organisation, attention to detail and team spirit were great to see.

But in Gideon Rachman’s very thoughtful piece in Tuesday’s Financial Times, he highlights some of the points we’ve been making over Germany and its economy over the last two years.

“Germany has lousy demographics. Its fertility rate of just over 1.3 children per woman means that the country’s population is both ageing and on a downward trajectory. Recent moves to reduce the pension age for some workers will make this problem worse,” writes Gideon.

And he adds that German industry is over-reliant on exporting to China. He points out that as China attempts to escape the middle income trap, its manufacturers will increasingly move upmarket to attack the profitable niches that German manufacturers have so far made their own.  This will be accompanied by strong government subsidies for innovative higher-value manufacturers.

Germany, and the rest of the global economy, faces the much more immediate risk that the fault lines in China’s property market threaten a new global economic crisis.

Plus, there is energy. Even Germany’s Economics Minister and Vice Chancellor has admitted that the country’s Energiewende policy is “on the verge of failure” because it has proved more complex than had been expected.

Energiewende, which involves a huge push towards renewables away from nuclear power and fossil fuels, is flawed because of the unreliability and cost of green energy. This has left Germany more dependent on Russian gas at a time when Russia is, of course, playing geopolitical games.  As Jim Ratcliffe, chairman of INEOS, pointed out earlier this year, Germany and the rest of Europe need a sensible energy policy based around hydrocarbons. Shale gas is an obvious crucial part of the answer.

In 2004, German football was in a similar crisis and so underwent a complete overhaul which culminated in Sunday’s World Cup triumph.

Politicians and CEOs need to follow the example of the footballers by putting their own master plan in place.

Here are just a few ideas to get the debate going:

  • Developing the right  products and services to serve an ageing population.
  • Raising the retirement age, whilst encouraging employers to retain, take on, and retrain older people.
  • Coming up with an energy  policy that makes use of not only of shale gas, but also of a much more liquid and globalised natural gas market.

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